Andre Milteer | Army Community Service Personal Financial Readiness Specialist

As a result of the 2016 National Defense Authorization Act and Public Law 114-92, military retirement benefits have changed from a primarily defined benefit based on the highest three years of income, into a reduced defined benefit blend that offers a beefed-up Thrift Savings Plan benefit. This enhanced benefit comes in the form of a Department of Defense automatic contribution alongside bonuses and payments tied to career milestones.

The TSP, similar to a 401(k) and one of the largest asset fund managers, is a quasi-governmental agency that manages the financial investment portfolio of DoD employees and service members. Within a family of fund options, ranging from the conservative Government Securities Investment “G Fund” to the aggressive International Stock Index Investment “I Fund,” TSP’s administrative fees are less than 45 cents per $1,000 of assets under management. Within the Blended Retirement System, the TSP can really power-up the service member’s retirement portfolio.

BRS participant investment portfolios fall under the umbrella of the regulations, policies and laws applicable to the Defense Finance and Accounting Services, Defense Military Pay Offices, Defense Joint Military Pay System and Office of the Under Secretary of Defense. Additional components include the Employee Data Record, Form TSP-U-1, Date of Initial Entry into Military Service, Pay Entry Basic Date and TSP-PEBD.

In accordance with the law, service members with a DEIMS of Jan. 1, 2018, or later are subject to the provisions of the BRS. A service member’s EDR is used by TSP administrators to determine which investment contributions will be percentage-matched by the DoD. DMPOs automatically enroll affected service members into the TSP. In turn, TSP administrators determine the service member’s vesting or future payment and asset benefit. This vesting is determined by the TSP-PEBD.

The BRS gives service members who do not become 20-year military careerists a path to walk away with some retirement savings after completion of their term of service.

However, BRS-eligible service members can choose to decline to participate in the TSP. To do so, they must complete a Form TSP-U-1, state that they decline, and submit the form to their unit finance officer. Requests received before Dec. 31, 2019, will halt any TSP automatic enrollment actions. More importantly, service members who previously submitted a BRS/TSP declination request to DFAS will need to submit a subsequent Form TSP-U-1 before Dec. 31, 2019, to halt a BRS automatic enrollment into TSP.

Until a new declination request is received, DMPOs will deduct and submit SM pay contributions to TSP. As of Jan. 1, 2020, by default, TSP will apply the participant’s pay contribution into an age-appropriate Lifecycle Investment “L Fund” until a declination is received. Further, the L Fund will be the default investment fund selection for service members who did not previously choose a specific TSP fund upon entering the BRS.

In summary, service members who are subject to the BRS will be automatically reenrolled in the TSP unless a declination is received before Dec. 31, 2019. BRS investment contributions will be defaulted into the L Fund.

For more information, consult a unit finance officer, the Army Community Service Personal Financial Readiness Office or visit https://www.tsp.go or https://militarypay.defense.gov/BlendedRetirement/.

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